He believes pricing of CO2 emissions through quotas and taxes have seemed too bad. The coal must be phased out faster and direct regulation is needed.

– We see that it works, says Sætre.
– Today CO2-price is not high enough. Until one gets wider coverage and more efficient systems, the regulation is a necessary measure, he said.

Referring to the US

Sætre refers to the United States, which have used direct regulation as a core element in its policy to reduce carbon emissions.

This has been the only available remedy because there has been no political realism to put a high enough CO2 price at the federal level.

– The US has no other way of doing it, says Sætre.
Another example is the UK, which has introduced a high CO2 tax, but they use regulations on top of that to phase out coal faster.

– In the UK, we have seen how the tax they have introduced combined with regulations have given the immediate effect into the energy market, says Sætre.

Emission standards

Sætre will not go so far as to say that coal should be banned. But over time need for coal consumption shall decrease sharply.

Statoil’s own estimate is that coal consumption in the power sector must be cut by three quarters from current levels by 2040 if the world wants to keep its two-degree target.

A common way to regulate away the coal usage is to introduce emissions standards which are so strict that they are difficult for coal plants to meet, explains Steffen Kallbekken, director of the climate research center CICEP.

– Taxes are the ideal instrument but it is difficult to introduce a high enough price, he says.

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